Younger London bankers chasing high salary in investment banking, find that working in New York is a better option. Investment banks in the UK have been hiking salaries over the last three months in a bid to stem an exodus of junior bankers as tough working weeks have stretched to 100 hours, leading to complaints from those on the lower rung of the career ladder.
But the shifts have favoured those working on Wall Street – the financial district of New York – more than analysts in the financial district of London – known as the ‘City’. Entry-level salaries at most big banks in New York are now 22 per cent higher than those in London, according to analysis of new pay figures in each city.
New York salaries have been converted (in this article) from US dollars to sterling for ease of comparison.
All London salaries could not be ascertained including those at Deutsche Bank and HSBC, which have both increased US-based entry-level salaries to $100,000. Credit Suisse has yet to unveil new junior salaries.
At other banks, the differential is even greater, Evermore now offers the highest salaries on Wall Street, with entry-level pay of $120,000 (£87,000) – at least $10,000 above its rivals. But in London, starting salaries at the bank are £63,000, people familiar with the matter have said, meaning US-based analysts are earning 38 per cent more.
The last major Wall Street bank to hike salaries for its juniors was Goldman Sachs but it trumped most of its rivals with $110,000 entry-level pay and $125,000 for those in their second year. In London, those numbers are £70,000 and £80,000 respectively, meaning New York based juniors earn 14 per cent more than their London counterparts. This is the same differential as at Perella Weinberg Partners and PJT Partners, the other banks to increase pay beyond rivals.
Compared with the UK median annual salary for full time employees of £31,461, according to the Office for National Statistics, investment bankers in London are richly rewarded, with starting salaries – plus a significant bonus – far beyond that level.
The nearest competitor to banks in the UK for graduate pay is the law sector, according to a 2021 report by research group High Fliers, offering £46,000 on average. But Magic Circle law firms are now offering entry-level salaries of £100,000 in London – essentially matching the $140,000 paid to graduates in the US.
The difference in pay at banks in London and New York could yet prove problematic. Recruiters estimate that in some banks, up to 70 per cent of analysts and associates have departed this year – a figure that typically hovers at around 40 per cent as juniors quit for private equity, start-ups or fizzle out of the industry.
Boutique investment banks, which advise on multi-billion dollar M&A deals alongside larger rivals, have already moved to increase pay beyond bulge bracket banks after seeing a growing number of juniors depart.
In New York, senior and junior dealmakers argue that competition for talent is fiercer. Private equity firms pluck top young bankers out just six months into their careers, and the plethora of so-called exit options for juniors after a couple of years at the sharp end of investment banking are greater.
Meanwhile, the brutal hours expected of junior bankers are even harsher in the US, which remains by far the biggest market for fees.
London recruiters say they are either starting satellite offices in New York or hiring London-based juniors for US roles on bigger pay packets.
Meanwhile, banks are increasing their search for new recruits ever-wider, tapping law firms and accountants, a trend last seen in the boom years before the 2008 financial crisis.
(The writer is our foreign correspondent based in the UK)
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